‘Scarcity and growth are oppositional’: How streetwear legend Supreme lost its luster
When the streetwear brand Supreme was sold at a loss earlier last month, analysts weren’t surprised. Its owner, VF Corp, had reported year-over-year revenue drops for the last seven consecutive quarters, and reports had swirled for months that VF Corp would try to offload Supreme to clean up its balance sheet.
Supreme’s business model, which involves weekly drops and limited-edition releases, was a departure from that of VF Corp’s other more traditional brands: The North Face, Timberland, Dickies and Vans. VF Corp acknowledged this, saying in a press release that there were “limited synergies” between itself and Supreme. But Supreme — which began as a New York City skate shop in 1994 — had long been dealing with problems of its own, too.
In fiscal 2023, VF Corp took a $735 million impairment charge against Supreme and revealed that Supreme’s revenue had dipped 7% from the year prior to total $523.1 million. Centric Software’s Centric Market Intelligence service found that search volume for “Supreme” was down nearly 30% from May 2022 to May 2024. Even resale sites have seen demand slow; in 2022, Supreme was no longer number one in StockX’s apparel category for the first time in StockX’s history, a StockX spokesperson told Modern Retail. Supreme now accounts for 16% of StockX’s apparel market, down from 36% in 2020 and 19% in 2023.
Supreme, once an independent brand, has changed hands multiple times in the past decade. In 2017, it sold a 50% share in the brand to the Carlyle Group for $500 million. Then, in 2020, it came under the ownership of VF Corp, which bought the brand for $2.1 billion. Now, in a deal that’s expected to close by the end of this year, EssilorLuxottica is absorbing Supreme for $1.5 billion in cash.
Supreme still has millions of fans, many of whom flock to Supreme’s website or stores for drops each Thursday and sell their gear on Facebook, eBay and even Reddit. But the brand has lost some of its cultural cachet in the last few years, in large part because it became too accessible, too corporate and too growth-minded under VF Corp, sources told Modern Retail. Now, some retail analysts, consultants and executives say they’re not sure if Supreme will be able to turn things around under its new owner, EssilorLuxottica.
“I think Supreme is in a precarious place,” Lois Sakany, the co-founder of women’s streetwear platform Snobette, told Modern Retail. “I think it’s going to be challenging for Supreme to get back to where it wants to be, as long as it’s owned by a company that is very top- and bottom-line minded. It’s really hard to put the genie back in the bottle once you’re owned by a big investor.”
Oversaturation in the market
For decades, Supreme was known for its place within counterculture. Its founder, James Jebbia, created the brand’s first store 30 years ago in New York City’s Nolita neighborhood. He envisioned Supreme as a home for local skaters, artists and punk and hip-hop fans.
Although the brand was embraced by mainstream celebrities like Justin Bieber and Victoria Beckham in subsequent years, Supreme’s appeal rested in its exclusivity. Supreme only sold certain amounts of certain products, and fans raced to snap them up each week. For years, people lined up hours in advance outside Supreme’s New York City store to make sure they could secure the newest sweatshirts or sweatpants. They soon did the same at Supreme’s other 16 locations throughout the U.S. and abroad. Supreme’s second store opened in 1998 in Daikanyama, Japan.
Supreme’s exclusive feel, however, faded as its footprint grew. When VF Corp bought Supreme in December 2020, it expected the brand to generate $500 million in revenue for fiscal 2022. But reaching that goal involved vast expansion, both through creating more Supreme merchandise and opening more Supreme stores.
Timing was not on VF Corp’s side. The world was in the middle of the Covid-19 pandemic, and brands worldwide were scrambling to stay afloat. “VF Corp bought [Supreme] at a high and tried to expand when everything else was contracting,” Juan Pellerano, chief marketing officer at e-commerce operating system Swap, told Modern Retail.
Outside of that, VF Corp’s mission for Supreme was misaligned with Supreme’s value proposition, Matt Powell, founder of the consultancy Spurwink River, told Modern Retail. “When VF paid as much money as they did for Supreme, they really needed the sales to ramp up very quickly,” he said. “[But] the whole premise behind Supreme and other streetwear brands is that the product is hard to get. It’s scarce. And scarcity and growth are really oppositional with each other.”
Now, a bunch of items have become “Supreme-ified.” On StockX, fans can buy Supreme x Hanes underwear, a Supreme version of Tamagotchi, a Supreme folding table and a Supreme ICEE machine. EBay lists Supreme socks and a Supreme x The North Face tote for sale. EssilorLuxottica reportedly has plans for a pair of Supreme smart glasses in partnership with Meta — news that solicited groans on Reddit. “I’m so glad my love for the hype died in 2019,” one user wrote in a thread. “I can’t take this anymore,” someone else wrote.
As some Supreme fans have said on message boards, new doesn’t always mean better. In fact, eBay told Modern Retail that users are increasingly looking for merchandise from when Supreme was independent. On eBay, searches for Supreme collections from the 1990s and 2000s jumped 100% and 85%, respectively, from February 2023 to February 2024.
Not all Supreme products are resold at a high premium like they were a decade ago, either. One Supreme box logo t-shirt, a staple for the brand, was listed on StockX for $139, as of August 1. That shirt, a collaboration with MM6 Maison Margiela, retailed for $88 when it came out in March of this year. In contrast, Supreme’s Swarovski hoodie hit resale markets for $1,500 the day after its release in 2019. Its original retail price was $398.
One reason shoppers can access more Supreme product is because Supreme now has 17 stores worldwide, including a new Los Angeles store that opened in 2023. Supreme has locations in the U.S., Germany, Japan, the U.K., France, Italy, China and South Korea, according to its website.
That physical expansion — while helpful for boosting access to the brand — lowered Supreme’s “it” factor, Quynh Mai, CEO and founder of the digital creative agency Qulture, told Modern Retail. “When Supreme was on Lafayette Street back in the day, it was a skater hangout, a clubhouse of sorts,” she said. “When it scaled and opened stores, no matter how magnificent, it lost its community and with it, its cool.”
All of this growth appears antithetical to a message Supreme’s founder Jebbia posted on Instagram in 2017 — although it’s worth mentioning that by that point, Supreme had already expanded beyond New York City and was well into millions of dollars in revenue.
“Supreme started as a small skate shop and we still have no intentions of expanding,” Jebbia said in his Instagram post dated August 23, 2017. “Our shop is almost like a ‘secret.’ We have exclusive stock and collaborations with very well-known brands like Louis Vuitton. The limited supply drives up price and desire for our products.”
Corporate ties & competition
Two months after Jebbia published that post on Instagram, Supreme sold a 50% stake to the Carlyle Group, a global investment firm that purports to manage $425 billion of assets. The Carlyle Group paid $500 million for the deal, which valued Supreme at $1 billion. Then, three years later, in 2020, VF Corp acquired the brand for $2.1 billion.
Both moves shrank Supreme’s “cool factor,” sources told Modern Retail. Supreme, long part of the underground world, was now front and center in corporate America. It was no longer alternative or niche. Being aligned with conglomerates, after all, “creates a different perception,” Snobette’s Sakany said.
Now, Supreme is getting new owners once again. On July 17, the eyewear company EssilorLuxottica, which also owns Ray-Ban and SunglassHut, announced it was purchasing Supreme for $1.5 billion. In a joint statement, EssilorLuxottica CEO Francesco Milleri and Deputy CEO Paul du Saillant said they would “work to preserve” Supreme’s “unique brand identity, fully-direct commercial approach and customer experience.” Supreme’s founder Jebbia will stay on at the company.
If anyone can help Supreme get its groove back, it might be EssilorLuxottica. The company lives in the luxury space and has a plethora of resources that could help the brand, sources previously told Modern Retail. Snap’s Pellerano, too, was optimistic about what EssilorLuxottica could do with Supreme.
“Knowing what I know about Luxottica, I think they’re probably just going to be more choiceful in the investments that they make in terms of brick and mortar,” Pellerano said. “They already have so many stores that they could probably pop Supreme into, so I think that’s going to be a big part of their strategy.”
Competition still abounds for Supreme, however. Lifestyle brands Fear of God, founded in 2013, and Corteiz, founded in 2017, have amassed large followings in recent years, especially amid the call to support Black-owned brands. Kith, Aimé Leon Dore and Palace — which were all founded in the last 15 years — are also among the streetwear brands eating into Supreme’s market share.
Many brands have also taken up the drop model Supreme popularized in the 1990s and 2000s, Spurwink River’s Powell pointed out. This includes big companies and small, independently-owned businesses. “A lot of people emulated the business model, because it’s not a complicated business model,” Powell told Modern Retail. “I think they’re all trying to do the same thing, just with their label on it.”
Pamela Danziger, a journalist and owner of marketing consultancy Unity Marketing, thinks Supreme could boost its popularity if EssilorLuxottica manages to create an alluring collaboration with another brand, like Supreme did with Louis Vuitton in 2017. “EL has good connections with a number of very strong brands, so it may be able to secure such a deal,” she told Modern Retail.
“But then,” Danziger continued, “Supreme isn’t the strong partner it used to be.”